My recent post on the suggestion for a Basic Income Guarantee (BIG) made me think of an idea I have been toying with for some time on how to privatize natural resources. Specifically I came to think of a suggestion for privatization of the Venezuelan energy sector, which I made some time ago in connection with my post on “A modest proposal for post-Chavez monetary reform in Venezuela”.
The reason I came to think of my suggestion, which I made in the commentary section of my blog post, was that I in that commentary suggested something similar to a Basic Income Guarantee – and was what I called a “citizen account”. Unlike the suggestion for a BIG this reform would not necessitate income redistribution as the citizen account would be funded (at least initially) from the privatization of the Venezuelan oil industry.
Here is what I wrote back then:
”… a serious reform of the “oil flows” is needed..However, I did not go into detail about my views on how to actually separate monetary and fiscal policy because I wanted to focus on the monetary part of my proposal.
…First of all I think (the Venezuelan) government should get completely out of the oil business. That would mean privatization of the entire oil sector. The revenue from the privatization(s) should be distributed equally among Venezuelan citizens and put into “citizen accounts”.
Venezuelans should then be able to buy welfare services – such as health care, unemployment insurance and old age pensions and maybe also education. That would mean that citizens could buy welfare services in the free market from private welfare service providers and insurance companies.
That obviously would mean that a lot of the (bad?) services that today is provided by the state would be totally privatized but be funded through “citizen accounts”. There would therefore be an equal distribution of the “oil wealth” among Venezuelan citizen.
Furthermore, the revenue from a tax on oil companies should go directly into the citizen accounts. The tax rate should be modest to provide incentives for investments in the Venezuelan oil industry (it is badly needed as far as I know…) and should be written into the Venezuelan constitution to guard against a politicization of the citizen account system.
This proposal of course would of course have wide ranging consequences, but I believe that it would at the same time liberalize the Venezuelan economy, ensure investments in the oil sector and finally make sure that every Venezuelan citizen will get its “fair share” (whatever that is) of Venezuela’s “oil wealth”.
Matt Zwolinski has tried to argue in favor of a Basic Income Guarantee on libertarian grounds, but as I have earlier argued it is hard to make an libertarian argument in favor of income redistribution. However, the proposal I have outlined above does not essentially necessitate income redistribution. So maybe if Matt rethinks his suggestion for a Basic Income Guarantee as a privatization strategy then he might be able to argue his case without violating libertarian core principles.
PS my regular readers would probably like to know what I think of today’s FOMC decision. Well, in fact the FOMC did exactly what I personally had expected – very moderate tapering, but also dovish forward guidance that makes future tapering strictly “state dependent”. The Fed will only scale back QE as the economy continues to improve.
Overall, I think this is fine. The US economy is clearly in recovery so the Fed naturally should start gradually to move towards a moderately tighter monetary stance, but not too fast. This is a fairly rule based policy and so far things are going great. By looking at the markets – the Fed did not tighten monetary conditions today – at least not judging from the very positive stock markets reaction. The FX market is telling the same story – Open MOUTH Operations where more important than Open Market Operations today.